Hammack is out with a report to her disapproval.
The US economy is in good shape, but there is more work to be done on inflation. Economic growth has been strong, and the job market is healthy. Broad measures of financial conditions have eased, and business sentiment remains strong. Monetary policy has played an important role in bringing PCE inflation down significantly from its peak of 7.2 percent in the summer of 2022. Despite these positive developments, inflation remains elevated, and recent progress in returning inflation to 2 percent is uneven.
With the health of the labor market, it is important to keep the focus on a timely return of inflation to 2 percent. To achieve this goal, I believe that monetary policy must be limited for a period of time. Based on my assessment that monetary policy is far from a neutral stance, I prefer to keep policy steady until we see further evidence that inflation is resuming its path to our 2 percent goal. In my mind, maintaining the target range for the federal funds rate at 4-1/2 to 4-3/4 percent at the December 2024 meeting was the preferred option given the strength of recent economic data, conditions appropriate financial, and my forecast. inflation will remain slightly above 2 percent over the next year amid a healthy labor market. The economic trend and recent rising inflation readings have caused me to revise my inflation forecast for next year. Furthermore, the balance of risks to the outlook appears to have shifted towards higher inflationary outcomes. There would be a risk that holding inflation above 2 percent too long would dampen inflation expectations, making it more difficult to return inflation to our target.
I viewed my own decision as a close call, and I appreciate the different perspectives my FOMC colleagues brought to our vigorous debate. I look forward to continuing to collaborate with my FOMC colleagues in serving the American public as we seek the best course for monetary policy to achieve our two goals -achieve order in terms of employment and price stability.
This article was written by Adam Button at www.forexlive.com.
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